If marginal cost is constant, what happens to a market if it alters from perfect competition to monopoly without any change in the position of the market demand curve or any variation in costs?
A) Consumer surplus increases, and the previously existing deadweight loss decreases.
B) Consumer surplus increases, and the previously existing deadweight loss increases.
C) Consumer surplus is eliminated, and an equal-sized deadweight loss is created.
D) Consumer surplus decreases in size, and a deadweight loss is created.
D
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Refer to Figure 15-5. If the monopolist charges price P* for output Q*, in order to maximize profit or minimize loss in the short run, it should
A) continue to produce because price is greater than average variable cost. B) shut down because price is greater than marginal cost. C) continue to produce because a monopolist always earns a profit. D) shut down because price is less than average total cost.
Productivity, or output per labor hour, rises as transportation costs fall
Indicate whether the statement is true or false